Does an economic incentive affect provider behavior? Evidence from a field experiment on different payment mechanisms. (2nd January 2019)

• Record Type: Journal Article
• Authors: Xi, Xiaoyu; Wang, Ennan; Lu, Qianni; Chen, Piaopiao; Wo, Tian; Tang, Kammy
• Is Part Of: Journal of medical economics. Volume 22:Number 1(2019)
• Page Start: 35
• Page End: 44
• Publication Date: 2019-01-02
• Subjects: Field experiment -- provider behavior -- payment system -- health status -- illness type; I18 -- I19; Medical care -- Cost control -- Periodicals; Medical economics -- Periodicals; 362.10941
• DOI: 10.1080/13696998.2018.1539399
• Languages: English
• ISSNs: 1369-6998

Abstract

Abstract: Aims: This study analyzed discrepancies in the quantity of medical services supplied by physicians under different payment systems for patients with different health statuses and illnesses by means of a field experiment. Methods: Based on the laboratory experiment of Heike Hennig-Schmidt, we designed a field experiment to examine fee-for-service (FFS), capitation (CAP), and diagnosis-related group (DRG) payment systems. Medical students were replaced with 220 physicians as experimental subjects, which more closely reflected the clinical choices made by physicians in the real world. Under the three payment mechanisms, the quantity of medical services provided by physicians when they treated patients with different health statuses and illnesses were collected. Finally, relevant statistics were computed and analyzed. Results: It was found that payment systems (sig. = 0.000) and patient health status (sig. = 0.000) had a stronger effect on physicians' choices regarding quantity of medical services than illness types (sig. = 0.793). Additionally, under the FFS and CAP payment systems, physicians overserved patients in good and intermediate health while underserving patients in bad health. Under the DRG payment system, physicians overserved patients in good health and underserved patients in intermediate and bad health. Correspondingly, under FFS and CAP, the proportional loss of benefits was the highest for patients in bad health and the lowest for patients in good and intermediate health; while under DRGs, patients in good and intermediate health had the largest and smallest loss of benefits, respectively. Limitations: In order to increase external effects of experiment results, we used the field experiment to replace laboratory experiment. However, the external effects still existed because of the blurring and abstraction of the parameters. Conclusions: Medical treatment cost and price affected the quantity of medical services provided by physicians. Therefore, we proposed that a mix of payment systems could address the common interests of physicians and patients, as well as influence incentives from payment systems.